US-Iran tensions and KCA building closure, Pakistani cotton industry facing severe difficulties

The Pakistani cotton industry is currently facing several problems at once. Due to tensions between the US and Iran, cotton import activities have been suspended, while exports of cotton products are also being affected. Along with this, the Karachi Cotton Association building was sealed on December 12, 2025 on the basis of an ownership dispute, which is still closed and this matter is under hearing in the Supreme Court. Due to the closure of the building, the KCA could not issue cotton spot rates for the last four and a half months, due to which Pakistan, despite being a major cotton producing country, is deprived of representation in the global cotton markets.

According to the Chairman of the Cotton Ginners Forum, Ahsan ul Haq, the banking industry is also facing difficulties due to the suspension of spot rates as it has not been possible to issue loans to textile mills and ginning factories on the basis of spot rates. In addition, insurance companies are also facing difficulties in settling cotton fire claims.

Another worrying situation is that the sudden rise in temperature has affected cotton sowing in several cotton zones. However, in coastal areas of Sindh, where sowing was done in February and March, harvesting is expected to start early and for the first time in Pakistan’s history, the ginning season may start in mid-May.

The record sugarcane cultivation has also badly affected the cotton industry, due to which cotton production has come down from 15 million bales to less than 6 million bales. Environmental pollution caused by the sugarcane crop has also badly affected the quality of cotton, which has further reduced exports. Ahsan ul Haq lamented that despite all these problems, no practical steps are being taken yet to revive cotton.